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Dairy Facts 2016

Debt Deal Rejects New Taxes; Will Dairy Reform Increase Them?

Aug 03, 2011

Just hours before the August 2nd deadline, Congress passed the Budget Control Act of 2011, which raises the nation's debt limit by $900 billion immediately upon President Obama's signing. Further increases in the debt limit may occur, provided deficit spending conditions are met, but efforts to include tax increases in the final debt-ceiling deal were rejected.

In the coming months, Congressional leaders will assign a 12-member "super committee" to identify and recommend $1.5 trillion in federal spending cuts to offset the debt-limit increase.
Many details of the agreement remain unresolved, including whether it will result in the writing of the 2012 Farm Bill before the end of 2011.

Looking ahead to the Farm Bill and how budget cuts will affect agriculture, House Agriculture Committee Chairman Frank Lucas (R-OK) said, "When we write the new Farm Bill, whether the joint committee compels us to write it at the end of this year or in regular order next summer, there will be less money in the next Farm Bill than in the last."

New Dairy Taxes

The introduction of new dairy taxes in the supply control section of Rep. Collin Peterson's (D-MN) draft dairy reform language means it is unlikely that his bill will qualify as serious debt reduction. According to the Congressional Budget Office, the Dairy Market Stabilization Program (DSMP) would increase government revenues by taxing dairy farmers nearly $1.2 billion over 10 years. In addition, the bill actually would increase spending for dairy above current levels.

The DMSP is designed to limit U.S. milk production by collecting taxes from dairy farmers when farm milk prices are low. According to Peterson's bill, half of this new dairy farmer assessment would be retained by the federal government to offset other spending or reduce the deficit. That means half the monies collected under the Dairy Market Stabilization Program would go directly to the U.S. Treasury.

Given the increased revenues, it's not surprising that Americans for Tax Reform, the taxpayer advocacy group led by Grover Norquist, has included the Dairy Market Stabilization Program on the list of programs identified as "tax and spend" and has signaled opposition to the plan.

Learn more about dairy policy reform efforts at and take advantage of the Congressional recess by contacting members of Congress while they are in their home districts. IDFA encourages members and others to register their opposition to the proposed legislation and its supply control component.

For more information, contact Ruth Saunders, IDFA vice president of policy and legislative affairs, at

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